Counterfeit Molly Tomlinson
What Are Counterfeit Goods? (Molly) Counterfeit goods are fake items deliberately made to look genuine.
These can range from clothes, accessories, perfume, cosmetics, pharmaceuticals and electrical items as well as pirate computer software and games.
The Politics Surrounding Counterfeit Goods (Beth) • • • • •
Rising tensions between US and Beijing is said to have politically motivated one of China’s largest online sales platforms Taobao to be re-blacklisted for trading counterfeit goods in 2016
At the International Intellectual Property Enforcement Summit Business Secretary Vince Cable said he had “forged new links” in China to fight back against counterfeits
Intellectual Property Minister Lord Younger stated “the UK and China are working ever more closely to reduce the impact of IP crime”
Britain faces £1.7billion fine from EU over counterfeit goods, risking souring Brexit negotiations; the fine is said to “add tensions” surrounding Brexit. OLAF (EU anti-fraud oﬃce) accused Britain custom oﬃcials of “failing to recognise” fake invoices and false claims
Post-Brexit: IP rights holders in the UK and EU do not have anything to worry about immediately post-referendum, and those requiring protection of their rights in the UK and EU will be required to file separate applications for trademarks and designs
The Politics Surrounding Counterfeit Goods (Beth) For Counterfeit Goods • Serves the middle class • Most manufacturers exploit third world country workers, regardless • The countries counterfeit products are manufactured in have different rules and regulations • “is an acknowledgement of the superiority of your design a reward enough for you, or are you greedy?”
Against Counterfeit Goods
• • • •
Intellectual property theft is “immoral, illegal, and unfashionable” • Supports child labour and sweat shops • Worldwide counterfeit trade valued at $500b • Health and safety precautions are not met
How much is the counterfeit industry worth? • Counterfeit goods have expanded into a global industry worth as much as $461 billion a year, almost the same as the drug trade industry according to a new report from the Organisation for Economic Cooperation and Development.
Chinese counterfeiting now costs foreign firms an estimated $20 billion a year in lost profits. "In the case of one consumer goods manufacturer, as much as 70 percent of the goods on the market are counterfeits," said Scholz.
• Counterfeit trade amounted to as much as 2.5% of world trade in 2013
• http://www.oecd.org/industry/global-trade-in-fake-goods-worth-nearly-half-a-trillion-dollars-ayear.htm video
Who benefits from counterfeit profits?
• Counterfeiting has attracted both organised and petty criminals who have not only derived huge profits from this trade but have also used it, both as a means to invest the proceeds of crime and to finance other crimes.
• Costs to countries where counterfeiting takes place Such countries suﬀer both tangible and intangible losses. First, foreign producers of reputable products become reluctant to manufacture their products in countries where counterfeiting is rife as they cannot rely on the enforcement of their intellectual property rights. Hence, such countries not only lose direct foreign investment but also miss out on foreign know-how.
• How much money does counterfeits take away from the fashion industry?
Counterfeits cost European brands the value of 9.7% of their total sales every year, or a staggering €26.3 billion ($28.7 billion), according to a new report by Europe’s Oﬃce for Harmonization in the Internal Market (OHIM).
• Counterfeiting is a major economic problem, called “the world’s fastest growing crime wave” Phillips (2005)
Economical (Iram) How does it create and takeaway jobs?
• sales ripple outward, resulting in approximately 363,000 lost jobs across the manufacturing, retail, and wholesale sectors of Europe’s fashion industries.
• People buying counterfeits continuously results into more sales which means more production and stock is needed which then makes more jobs for people to make counterfeits.
• If many products from such countries, including genuine ones, gain a reputation of being of poor quality, this will cause export losses which in turn implies both job losses and loss of foreign exchange. It could be argued that the counterfeiting industry creates jobs but these jobs are often poorly paid, often involve substandard working conditions and sometimes use child labour.
Social DO WE OWN AN IDEA?
•Ideas can be legally protected through copy right laws
•A brand can make it known that an idea is yours through promotion on the internet and social media outlets meaning that it’s easier to call out those who copy them due to their large market presence.
•If brands don’t act on an idea then is it really theirs- if they put it out there, it’s out there for whoever see’s it to interpret and act upon.
•People are allowed to add to ideas, take ideas and make them their own even if it resembles the original, it’s all open to interpretation of whether the creator believes it to be a copy. The second party could believe that their reinterpretation is an original idea.
Conclusion: we don’t own ideas unless they are legally protected.
Social WHY DO WE BUY COUNTERFEIT GOODS? (Gabby & Abi) • social emulation- People want to wear the brand/s of the people in which they aspire to be.
• fakes allow shoppers to consume the prestigious brand without buying the high-quality good.
• people who have negative views of big business and believe that luxury goods are retailed at unfair prices.
• Even when goods contain deliberate mistakes people still buy them, it’s all about imitating, pretending to have status without actually having it.
• Cheating at the luxury lifestyle.
• People who wouldn't normally buy luxury product, realise they can access this through fake products.
• People often buy counterfeits by accident, leading to anger and distrust at high end brands.
• Hedonistic reasons of self-fulfilment.
SUMMARY OF POINTS FROM ‘ Why do consumers buy counterfeit luxury brands?’ By Kieth Wilcox, Hyeong Min Kim and Sankar Sen. -
Counterfeits alter preferences for the real brand.
Help gain approval in social settings.
when their luxury brand preferences for the real thing are social adjustive rather than value expressive.
“exposing consumers of a luxury brand to advertising messages that diﬀerentially prime the social goals associated with value-expressive versus social-adjustive attitudes influences their preferences for counterfeits.
Social WHY DO PEOPLE CHOOSE NOT TO BUY COUNTERFEITS?
(Abi) “Jaehee Jung, associate professor of fashion and apparel studies, is the co-author of a new paper that has been accepted for publication in Luxury Research Journal. She and co-authors from Leibniz University of Hannover in Germany and Kyung Hee University in South Korea studied consumer behaviour in regard to genuine vs. counterfeit luxury goods, from handbags and shoes to cars and fine wine.”
buy genuine items in America for hedonistic reasons of self-fulfilment while french consumers, for example value the items because they are expensive and exclusive.”
consumers want high-quality goods, and they worry that counterfeits won’t have the quality they desire. Korean consumers are more concerned about social perceptions and making a good impression on others. They worry that people will think less of them if they are known to buy counterfeits.”
Manser. A, Cross-cultural counterfeits, 2015 [Article] retrieved from, http:// www1.udel.edu/udaily/2015/may/counterfeit-luxury-goods-051815.html
Social IS IT MORALLY RIGHT TO BUY COUNTERFEITS? (Gabby) YES: • Allows customers access to a lifestyle that they would normally not be able to aﬀord.
• People feel no moral obligation to how the goods get to them- all they care is that it is a bargain, they aren’t bothered if the law was broken in any way to deliver the goods.
• People feel that multi-national companies are not going to be hurt by the sale of a £10 fake when they are selling handbags for £700 pounds. The profit damage is considered extremely minimal.
• “Is it really stealing revenue from a company if I would never buy a genuine Gucci bag?”- Steven Brown to the BBC. People who buy fakes would never would never pay for the real thingcounterfeit sales are not stealing customers.
• Skill is still needed in making fakes- it does create jobs.
NO: • takes the exclusivity away from the brands.
• genuine manufacturers are deprived of profit.
• thought to encourages and funds organised crime and terrorism- National Fraud Intelligence Bureau- “you’re helping the trader break the law”.
• Businesses feel that counterfeits damage their reputation.
• Brands work hard to create their identities, counterfeits undermine all this hard work.
Social CELEBRITY INFLUENCE (Abi) “30% admit they have bought a celebrity-endorsed product with women twice as likely to be swayed by famous faces than men.”
-Studying females using brain scanners, it was apparent that it was easier for women to make a more memorable link for a later date.
Kirkova. D. ’Are YOU swayed by a famous face? Women buy twice as many celebrity-endorsed products as men’,2014, [Article] retrieved from, http://www.dailymail.co.uk/femail/article-2641476/Susceptible-womenbuy-twice-celebrity-endorsed-products-men.html
CONCLUSION: This all leads to people buying counterfeits in order to try to be like their favourite celebrity or socialite. For example, Kylie Jenner Lipkits are so highly sought after by fans that it is more accessible now to buy a fake on the internet than to buy the real thing.
Social PHYCOLOGICAL INSIGHT (Abi) •
“Inauthentic image-making might not only corrupt personal ethics, but also lead to a generally cynical attitude towards other people.”
“If wearing counterfeit stuﬀ makes people feel inauthentic and behave unethically, might they see others as phoney and unethical to”
Herbert. W. The Psychology of Knock Oﬀs: Why ‘Faking It’ Makes Us Feel (and Act) Like Phonies, 2011, [Blog post], retrieved from https://m.huﬀpost.com/us/entry/523218
TEST ON FAKES- HOW IT MAKES US FEEL •“wearing counterfeit glasses not only fails to boost our ego and self image the way we hope, it actually undermines our internal sense of authenticity. Faking it makes us feel like phonies and cheaters on the inside, and this alienated counterfeit self leads to cheating and cynicism in the real world.”
•Scientists asked women wearing fake Chloe sunglasses to complete a maths test. 70% inflated their performance when no one was looking, and stole the reward cash as a result of this.
Technological Impacts On Counterfeit Goods Where are counterfeit goods sold online?
- Counterfeit items are sold online on auction sites, online marketplaces and apps.
- Third party sites such as amazon and eBay are the biggest websites for selling fakes, with online sales of counterfeits growing by 15% on these sites.
- 85-95% of these products come from china where they are made and manufactured for cheap.
- “In 2013, the market for counterfeit clothing was worth $12 billion”
- “one in six products sold online is identified as counterfeit, with 30% of all counterfeit seizures in the EU linked to Internet distribution channels. This is due to low operating costs, high levels of anonymity and uninhibited access to a global customer base”
- the Internet has enabled legitimate brands to build professional marketplaces that can reach a wide customer base.
- The fake brands spend large amounts of money on developing fake websites to attract customers and they also use social media as a form of promotion.
- The fake websites mimic the looks of the authentic third-party sites such as MyTheresa and Net-a-Porter.
- “three quarters of customers who bought a fake fashion item online did it unintentionally”
.Is there technology that can spot/prevent counterfeits? -RFID and NFC chips or QR codes, which can be embedded into products and contain electronically stored information that can be read by devices such as mobile phones, have helped digitise the authentication process. Consumers can now register a product using a brand’s online authentication platform or mobile app. If the product is a fake, both the customer and the brand will be alerted.
-Pre-Fall 2014, Ferragamo has inserted RFID microchips into the soles of almost all its women’s shoes.
-it has destroyed over 12,500 of ferragama fake products.
-Company ‘netnames’ helps prevent the online selling of counterfeits.
-they “rapidly detect and enforce against infringements across all online channels. Our anti-counterfeit enforcement services are the most comprehensive in the brand protection market, and help thousands of brands to prosper on the Internet.”
-the company employs over 50 analysts who speak over 30 languages to analyse the results and identify instances of counterfeiting, before taking action to have the seller or site removed.
-In 2015, Salvatore Ferragamo blocked 91,000 online advertisements for fake goods and recovered or cancelled 140 domain names and illegal websites, most of which were based in China.
“You can never solve 100 percent of the problem… Counterfeiters find new and innovative ways to sell fakes.”
Technological Impacts On Counterfeit Goods (Demi) Social media shaming and promoting counterfeits. - Social media is making it easy for counterfeit products to be promoted.
- around 150,000 posts on photo-sharing social networking site Instagram that were tagged with luxury brand names such as #Chanel or #LouisVuitton. It found that approximately 20% of them actually featured fake goods, mostly from accounts based in China, Russia and Malaysia.
- In 2016, 20,000 counterfeit good accounts, from which more than 140,000 images were published within a three-day period. These posts are often accompanied with contact information so that buyers can get in touch with the seller.
- This then contributes to a US$29 billion impact on the luxury goods sector each year.
- Fake brands are even attempting to hack luxury brands Instagram accounts with Chanel, Prada, Louis Vuitton, fendi and Gucci being the most targeted.
- You tubers are both promoting and shaming counterfeit goods online by doing reviews of them and comparing them to the real product. This is with products such as makeup, bags, clothes and even iPhones.
Diet Prada is the Instagram account calling out the copycat culture within fashion.
- Brands such as Gucci have been accused of stealing alien designs, snake logos, tiger motifs and a jacket design from Dapper Dan.
- Why did diet Prada begin? “We were working together at one point and in our research, kept seeing copies over and over again. We would do these live roasts of collections and thought it was lol enough to put online.”
- The account has over 40,000 followers and are known as the knock-oﬀ detectives.
Legal Issues With Counterfeit Goods (Jess) Criminal oﬀence to financially gain by using someone else’s trademark, without their permission.
* Laws: it is illegal to knowingly traﬃc (transport, sale or produce) counterfeits
* It is legal to knowingly buy counterfeits for personal use
* 1st time oﬀenders can get up to 10 years prison time and $2 million fine
* Multiple oﬀender can get up to 20 years in prison and a $5 million fine
Definitions: * Counterfeit: a product identical to another product. Infringes on trademark. Typically sold online and by “back alley vendors”
* Knock oﬀ: resembles another item. Online and in stores. Legal but can be legally challenged by the original brand in court.
* Replica: Similar to a knock oﬀ, counterfeits use this to sell their product. Sometimes they resemble a deign but not identical. Can be illegal.
Legal Issues With Counterfeit Goods (Jess) Online regulations: * Depop rules and regulations state a list of products that arenâ€™t allowed to be displayed, giving examples of counterfeits and equipment to make counterfeits
* Depop will remove items they believe breach their terms and conditions
* eBay have also sellers are not allowed to list counterfeit goods
* However, it is virtually impossible for these sites to check every single listing so many sellers get away with it
Environmental Issues With Counterfeit Goods (Molly)
Over the last few years, there has become an increased awareness on the disposing of counterfeits due their rising existence within the market. Their disposal meeds to be environmentally friendly, however this can be expensive and technically complex due to the unknown elements in counterfeit goods.
Over 77% of seized goods in Europe are destroyed using one of the of following methods: Recycling, Open Air Burning, Shredding, Crushing, Landfills and Charity Donations. This depends on the nature of of the goods e.g. clothing or pharmaceuticals. Also the availability of the resources as often goods have to be shipped to diﬀerent countries in order to be destroyed, due to the environmental regulations some countries hold.
Types of Disposal Not all counterfeit goods are recyclable such as toxic substances, however some can be dismantled and reused. 95% of counterfeit goods seized in the Netherlands are recycled by the European anti- counterfeiting network: REACT. The remaining materials are then sold on to specialist recycling units, who use them to make their own goods such as furniture or clothing. This approach is often seen as positive as it oﬀers employment to socially disadvantaged people, and also a positive environmental outcome to counterfeits.
Another environmentally friendly method is the donation of counterfeit goods, which is common in countries such as China, Philippines and the UK. In the UK “His Church” is a charity who collect counterfeit goods and alter them by de- branding them with “His”. This approach is only feasible when goods have been through rigorous testing and are deemed non - hazardous, sub- standard or defective. The rights of the IP owners also need to be respected so that there is no repetitional damage and counterfeit doesn’t re- occur. For example, in the Republic of Korea volunteers decorated counterfeit sneakers with drawings, these were then donated to orphanages.
Incineration and landfills are also both common methods of counterfeit destruction. High profile public ceremonies destroying counterfeit goods often take place, as these break down public perceptions of counterfeit goods and build positive reputations for IP Rights. A recent even in Phuket destroyed over 80,000 items with a street value of 182 million Bhat, which equated to 5.9 million US dollars. However these methods require careful management and adherence to environmental laws, as many are transported to diﬀerent countries which must be taken into consideration.
Environmental Issues With Counterfeit Goods (Molly) In July 2012, the government of Thailand organised a regional workshop on the disposal of counterfeit goods. "The Workshop was an eye-opener and was extremely helpful in enabling me to grasp the serious impact that counterfeit and IP infringing goods in general can have on the environment” quoted Mr Tohpong Smith of the Department of Intellectual Property, Thailand.
Environmental Regulations The disposal of counterfeit goods also poses the question as to whether factories making counterfeit goods abide by environmental regulations. As many factories are unknown to governments it is unlikely that many stick to the consumer laws and regulations meaning that the consumer health and safety is likely to be at risk when using a counterfeit product. For example, chemicals used in production may be abrasive or illegal. There is also an increased environmental risk as counterfeit manufacturers are less likely to be concerned about the environmental damage they may be causing through factors such as air pollution.
These lack of regulations within production can often cause problems in the environment. Such as toxic dyes and chemicals disposed of unlawfully cannot be traced back to one person who can be held solely responsible. Also meaning that legalities and consumer rights are non- existent. Seized counterfeit goods are also hard to dispose of due to their unknown composition e.g. in counterfeit makeup products, making it diﬃcult for an environmentally friendly process to be used as this could release chemicals into the atmosphere causing further damage.
As well as this, there is also the environmental impacts of materials used in counterfeit goods.
Pesticides are used to protect textiles, but can also harm wildlife and contaminate other products such as the food we eat. Bleaching agents also damage the environment and consumer health as the types used in counterfeit goods are often not safe for human use. Due to the quality of counterfeit goods, many are thrown away faster than would happen with a real version. This means that more products end in landfills, which let oﬀ more greenhouse gases and take up more room on the planet. Similarly, the over usage of natural products can cause an ecological misbalance. The machinery used to create counterfeit products also causes environmental issues as many cause sound and air pollution. Lastly, animal exploitation often comes as a given with intensive farming which causes damage to the environmental as a whole this also adds another ethical issue to counterfeit goods.
Examples Of Counterfeit Goods (Aleisha) I had a look on eBay to see if I could find a very popular. eBay is one of the top most popular platforms to access fake products whether that be beauty products, clothing, accessories etc. Today it is so easy to create replicas and copies of brands and I decided to look at a few diﬀerent brands such as Kylies cosmetics.
The main reason that there are so many copies of kylie a lipsticks and lip liners I'd because the products it's self are at a reasonable price but to get them anywhere else other than the US it's extremely hard as shopping alone is double the price but the transfer at boarders has become very expensive therefor you could be spending over £100 for 1 lipstick and lip liner.
I also found out that a lot of Kylies cosmetics are produced and created in china, as I found out on eBay where they come from. The selling price for these products make it so much easier to purchase and you can easily tell they are fake by the price of the products. On eBay they are going for around 5.99 or even less.
From experience my mum purchased me a lipstick online and as she didn't realise it was fake when it arrived it was completely the wrong shade. There isn't much promotion on fake goods as it is illegal, and promoting and selling these products can cause your website/store/profiles to be shut down and sued.
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